By Phil Power - October 24, 2007
There was a time -- and not all that long ago -- when the Big Three automakers were really big and didn’t want, need or dream of getting any outside help. That was also an era when nobody thought much -- let alone worried -- about Michigan’s great universities.
Sure, the University of Michigan was a darned good school, a nice place to go visit on sunny Saturdays for a football game. But it was way off there to the west, an ivy-clad touch of the ivy league in the Midwest, but largely irrelevant to the real business of the state.
Michigan State University was okay, if you liked a pretty campus or had something to do with farming and the agricultural extension program. As for Wayne State -- well, it was struggling to educate the children of immigrants and find an urban mission at the other end of the Cass Corridor.
My, how things have changed! Several hundred people who attended last week’s two-day conference in Ann Arbor on “The Role of Engaged Universities in Economic Transformation” were showered with the new reality of how central our research institutions are to the economic future of our troubled state.
Over the past five years, the state’s three premier research universities – U of M, MSU and WSU – have received 632 patents and helped form 79 start-up companies. That’s a big boost for a state struggling to replace brawn-based manufacturing with brain-based high technology jobs.
The three universities score more than $800 million each year in federal and other research grants. You never can tell exactly which inventions from university labs (or from anyplace else) are going to be commercial successes, but one thing is certain: Without funding for research there will be no spin-offs.
The Big Three universities together employ more than 68,000 people, accounting for more than $6 billion in wages and benefits.
The Anderson Economic Group, of East Lansing, estimates that 6.9 percent of all wage and salary income in Michigan comes from these three schools, which have special status in our state constitution.
But beyond the statistics lie some impressive, current results.
The U of M’s College of Engineering is starting a new Center for Entrepreneurial Programs, which will help students turn their bright ideas into business ventures.
The Center is being funded by a $1 million anonymous gift. And it’s operating in a technology transfer environment that has been enormously energized by the school’s new Vice President for Research, Steve Forrest, a research whiz-bang himself with a fistful of patents and spin-off experience.
In Holland, over near Lake Michigan, MSU is working with local entrepreneurs to repopulate a building recently vacated by Pfizer. It will now be home to a bevy of life science companies. In Ann Arbor, the U of M is working with SPARK, the Ann Arbor-based economic development group, to set up a wet lab incubator for local start-ups; university researchers and four firms will occupy another former Pfizer building, a 34,000-square-foot lab.
The state also has several smaller universities doing significant research, including Oakland University, Western Michigan and Michigan Tech. It ought to be obvious that these too are centrally important to the future of our state.
And it is -- except to the political class in Lansing. In an stubborn and spectacular display of disconnectedness from reality, our entire political leadership – both houses of the legislature plus the governor – have systematically disinvested in higher education over the past five years.
Farmers would have called this “eating our seed corn.”
Consider these numbers, obtained from Mike Boulus, executive director of the Presidents’ Council, State Universities of Michigan:
· Total state appropriations to higher education in 2002: $1.612 billion.
· Total appropriations to higher education in 2007: $1.437 billion.
· Absolute reduction in appropriations: $178 million, or 11 percent.
And that’s not even taking inflation into consideration. When you do, the cut in state support amounts to $375 million, or 23.2 percent.
So while other states round the country have increased their support for public universities by an average of 25 percent over the past five years, Michigan has chosen to reduce support for higher education by nearly 25 percent.
Even those in Lansing who have trouble with sums can recognize how far this has set Michigan back. This flies in the face of all business sense.
Any company facing trouble immediately identifies its most important, proprietary competitive assets and mounts a sustained investment program to build them up, gain market share and build the bottom line. Michigan, by contrast, has chosen to strangle one of our few competitive assets.
The wonder is not that people are dismayed. The wonder is that people – especially those who have children and who care about the future – are not absolutely furious and marching on Lansing and talking about recalls over this.
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Editor’s Note: Former newspaper publisher and University of Michigan Regent Phil Power is a longtime observer of Michigan politics and economics. He is also the founder and president of The Center for Michigan, a centrist think-and-do tank. The opinions expressed here are Power’s own and do not represent the official views of The Center. Power welcomes your comments at ppower@thecenterformichigan.net.
6 Comments
I believe that education is important. You need qualified people to develope the economy in Michigan. Higher education is not the only thing that has been cut. The jobs of people have been cut. Homes have been lost. People we have already educated are leaving the state. They are leaving because there is nothing for them here. We do not have the resources to educate students to take that education elseware. We need to make the climate favorable for business first and then we can bring ours educated home to their state and their families.
It is time that the educators came into the real world. It seems that they are so involved in their own reality that they have removed themselves from the people who support them. It is time for those indowments horded in higher education be put to better use.
Rose Bogaert, Chair
Wayne County Taxpayeers Association, Inc.
In order to achieve, dare I say it, a "fair and balanced" understanding of this topic, I commend to your attention the analysis and opinion found at http://www.mackinac.org/archives/2007/s2007-8.pdf . I may agree with Phil's policy recommendation, but his one dimensional argument based on falling real appropriations is misleading and unconvincing.
JBP
Grand Rapids
It feels to me that private industries do the same thing, for their area of interest, by investing THEIR OWN money.
Why is there a pervasive thought that the best way to improve our economic growth is at tax payers expense?
We should be truly supportive of the investments of our own industries/companies in our state (vs taxing them) rather than giving our taxes to those who rarely invent any ideas that are viable in the free market economy.
Phil:
I think your comments are right in theory - "Any company facing trouble
immediately identifies its most important, proprietary competitive
assets and mounts a sustained investment program to build them up, gain
market share and build the bottom line. Michigan, by contrast, has
chosen to strangle one of our few competitive assets."
However, I am afraid that any new government dollars will be spent as
usual - allocated to all 15 universities on some political basis with no
accountability for how it is spent and certainly no "return on
investment" calculation. That is not how the private sector "invests".
Perhaps that is why the support for the latest tax increases has been
less than overwhelming, especially the way it was done. Maybe the state
should hire a bunch of investment bankers and have then allocate any new
"investments" in public education.
Fred
Unfortunately, the idea of taxpayer funded higher education is not based in statistical fact.
I was just in Silicon Valley on Mon and Tuesday (10/29 and 10/30). What is clear is that California cut way back on publicly funded higher education many years ago with Proposition 13. A very large number of the people I dealth with there were from other geographic regions and countries. This is typical in the Valley.
What builds an economy is the infrastructure. California built an area, where infrastructure for high tech development can coexist, and outside resources are available for all aspects of product design support. When you have a gold mine, miners will come to harvest the gold. Michigan is not building a gold mine to attract miners. It is training miners to go out and find gold mines in other states.
Michigan has to reevaluate higher education spending that creates artificial economies like in Ann Arbor, that do not enhance the infrastructure of scientific development. There is one reason pharmaceutical giant Pfizer will close its 2 million-square-foot Plymouth Road facility, and the city of Ann Arbor will lose its single largest taxpayer and largest private employer.
Infrastucture, like buses and subways invite businesses. Good public K-12 schools for peoples kids. Stuffing money into the hands of acedemics so they can build mansions in Washtenaw County does not create the gold mine that Michigan needs.
A good study of Silicon Valley should be done by Phil Power to see from the business side what it takes to attract businesses. Phil knows a lot about the acedemic world, but needs some advice on growing technology and industrial employement.
John Hargenrader
Dear Mr. Power,
Sorry for the delayed response.
These comments are in response to your editorial of October 25, 2007; "Funding state colleges is crucial to our future"
Great article. So true. So obvious.
However, I would add that our state colleges could be an immediate economic boost. Anyone who has ever been to a college town knows the economic impact of the school and the students. East Lansing, Ann
Arbor, Big Rapids, Houghton, Mt. Pleasant, Kalamazoo, etc. Imagine if
the governor or legislature mandated that each of the 15 state schools
increase enrollment by 1,000 students this coming September. And, even
better if they required that they all be out of state students.
What incentive package would the governor design for a company that would agree to relocate 15,000 jobs here?
What incentive package would the legislature create if it would guarantee 15,000 "permanent" tourists?
Forget trying to get factories to move here. Increase, enhance, and grow what we already do great; Education and Healthcare.
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